Globalisation, Inequality and Poverty Relationships: A Cross Country Evidence
39 Pages Posted: 1 Aug 2006
Date Written: July 2006
In this research, the relationship between globalisation and poverty and income inequality is determined. A whole new globalisation index has been constructed based on data covering a large sample of 65 developing countries. The index is based on the globalisation index proposed by A.T. Kearney/Foreign Policy Magazine. The index is composed of four subindices, namely: economic integration, personal contacts, technological connections and political engagement. Results from cross-sectional regression analysis show that there is a significant relationship between globalisation and poverty and income inequality. Globalisation leads to poverty reduction and it reduces income inequality. The relationship between globalisation and poverty remains significant when controlled for regional heterogeneity. A non-linear analysis shows that poverty has diminishing returns to benefits from globalisation.
Keywords: globalisation, poverty, inequality, indices
JEL Classification: C43, F15, O57
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